# What is SKU – Stock Keeping Unit?

What is SKU – Stock Keeping Unit? A unique identifier for each product variation. The basis for precise inventory management.

## How it works in practice

An SKU is the product's DNA. Without organized SKUs, you don't know what's selling, what isn't, and what to reorder.

## Related metrics

- Inventory Management — SKU is the foundation
- PIM — stores SKU data
- COGS — accurate calculation requires SKU
- Fulfillment — picking is done by SKU

## Common misconception

'SKU equals barcode.' A barcode is a standard external identifier. An SKU is an internal identifier you define yourself.

## How to fix it

SKUs in chaos? (1) use uniform naming: category-product-variation, (2) export to a spreadsheet and organize, (3) don't delete old ones — mark them inactive.

## Real-world example

A clothing store: 400 products × 5 colors × 5 sizes = 10,000 SKUs with no naming convention. 3 days of organizing cut stuck inventory costs by 23%.

## Where to start

Set an SKU naming convention before uploading the first product.

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Category: Operations · From the [Jimmy OS KPI Glossary](https://jimmy-os.com/glossary/kpi.md) · Source page: https://jimmy-os.com/glossary/kpi/sku-stock-keeping-unit